Is a financial intervention in order? A real-life business story.

When we talk about intervention, we usually think about helping a loved one’s emotional, physical or financial well-being. The family of a drug addict may intervene to try to stop drug abuse. An individual with mental illness may have an intervention to seek the medical help necessary to get healthy.  Or a financial intervention might be needed for a person who has maxed out their credit cards.

Businesses need interventions, too. 

But interventions aren’t just for your personal life. In a business that’s struggling, a financial intervention may be the first step in getting the company’s financial health back on track. So what does this mean and how does it help? How do you know when it’s the right time for an intervention? Let me provide a real-life example.

Last year, I received a call from a colleague to discuss a company’s financial issues.  The CEO had just fired the Controller, and wasn’t comfortable with the financial information that was being presented to the board.  The CEO realized it was time for an intervention, so I was brought in to provide an objective assessment of the company’s financial status.

Your people are your best source of information. 

In performing the assessment, I interviewed several people within the company, knowing they are the best source of information about day-to-day operations. As an outsider, I was aware that I was a threat to the staff’s way of doing things, and potentially a threat to their jobs. Being sensitive to the current staff’s concerns is a big part of getting an accurate assessment.

I made a point to ask the staff to offer their own feedback and suggestions. They were closest to the processes and may have thought of more efficient ways to work. This may have been the first time they were given the opportunity to voice an opinion, or they may have been shut down by managers in the past. Thankfully, they were helpful in showing me how things were being done and how they thought they could be improved. They explained the nuances of the processes and its multiple steps.  But when I asked why the process was so manual, I was surprised by the answers. “Because the customer wants it this way” or “It’s always been done this way.”  Never was the answer, “This is the most efficient process.”

I carefully documented the company’s processes and procedures and got a feel for the office environment. The assessment included validation of the financial statements, development of control reports and processes, as well as documentation of the operational processes.  It included a recommendation to implement industry-specific software to allow for increased automation and improved productivity.

After the assessment, I was able to show the company where they were wasting time and money. Streamlined processes and new systems were implemented, giving more operational and financial controls. Because financial data is now more easily available to management, they’re able to make more accurate forecasts, resulting in stronger results.

Deciding if your company needs an intervention or general assessment will help you see if you’re on the right track, or if you’re missing opportunities. An intervention is often necessary to be able to objectively view the situation outside of the day-to-day happenings within a company. An outsider can often see problems that entrenched employees can’t see or aren’t empowered to solve. With a new light shed on day-to-day operations, management can see new opportunities for efficiency and growth.

Is your company being dragged down by day-to-day operations?  What would it be like if the operations were smooth, if the financial processes were efficient and productive?

Call the team at Price Turner CFOs today to set up a consultation, and we can help you find the answers!